This is Exchanges at Goldman Sachs and I'm Allison Nathan a senior strategist in Goldman Sachs research.

Today I have the great pleasure of speaking with Charminne

as we always do this time of year.

She's got a new report out called Piloting Through, which is her 14th annual Investment

Outlook and lays out her team's investment themes for the year ahead.

Charmin is the head of the Investment Strategy Group and Chief Investment Officer

for the Consumer and Wealth Management Division.

Charmaine, welcome back to the program.

Hello, Allison.

Thank you.

So coming into the new year, by almost every measure, U.S. stocks look expensive. Of course we've had a very

crazy couple weeks in the markets but we've been running through a nearly 13 year

bull market so valuations are still quite elevated. But you are you in your report

that valuations aren't good enough of a reason

to exit the market.

So why is that?

You're quite right valuations are expensive. We use a series of metrics and based on those equity related metrics

we are in the tenth decile of valuations. So there are no ifs and buts about the fact that equities are expensive.

The reason we say valuation alone is not a good signal to go underweight equities

is in fact because we've been in the 10th deciles since December 2016 and since then

US equities as measured by the S&P 500 has been up about 130%. So using that alone to get out of equities means you leave a lot of money on the

table and get out too quickly. The same thing happened in the mid-1990s. We got into the

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